Exam 7: Production Inputs and Cost Building Blocks for Supply Analysis

If economies of scale exist for a particular production relationship, long-run average costs will

Figure 7-15 -In Figure 7-15, we would expect a move of the budget line from A to B if

Table 7-1 -In which zone does the total physical product reach it maximum value?

The firm's average cost curve is the result of cost minimization in the use of fixed inputs.

The long run is a period long enough so that one of the firm's commitments ends.

Production indifference curves bow inward toward the graph's origin because of

AC is lower in the long run than in the short run because

Everything else equal, the AC curve will shift when

Total fixed cost falls as output expands.

The rule for the optimal use of any input says that

A budget line is the locus of all points representing every input combination of inputs that the producer can afford to buy with a given amount of money and given input prices.

The major incentive for cost minimization is the

The average cost curve shows the total cost divided by quantity produced for various levels of output.

Figure 7-15 -For a firm at equilibrium, at point A in Figure 7-15

A firm's optimal input proportions may change if

Labor is available at a wage of $10.The last worker hired by Cal's Corn Farm added 20 ears of corn, which Cal has priced at four ears for $1.What advice would you give Cal?

A cost curve drawn with years on the horizontal axis and costs per unit on the vertical axis would be a(n)

Production costs for a given output will be minimized when the

Most firms have very little flexibility in their choice of input proportions.

Firms choose the highest indifference curve they can obtain given the lowest possible budget line.